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					                           As Introduced

 129th General Assembly
     Regular Session                                    H. B. No. 581
        2011-2012

                   Representatives Lundy, Gerberry

  Cosponsors: Representatives Murray, Driehaus, Yuko, Winburn, Clyde,
                            Garland, Boyd



                              A BILL
             To amend sections 5739.02 and 5739.05 of the Revised        1
                Code to provide a two-day sales tax "holiday" each       2
                August during which sales of back-to-school              3
                clothing, school supplies, computers, and computer       4
                accessories are exempt from sales and use taxes.         5


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:


    Section 1. That sections 5739.02 and 5739.05 of the Revised          6
Code be amended to read as follows:                                      7


    Sec. 5739.02. For the purpose of providing revenue with which        8
to meet the needs of the state, for the use of the general revenue       9
fund of the state, for the purpose of securing a thorough and           10
efficient system of common schools throughout the state, for the        11
purpose of affording revenues, in addition to those from general        12
property taxes, permitted under constitutional limitations, and         13
from other sources, for the support of local governmental               14
functions, and for the purpose of reimbursing the state for the         15
expense of administering this chapter, an excise tax is hereby          16
levied on each retail sale made in this state.                          17

    (A)(1) The tax shall be collected as provided in section            18
H. B. No. 581                                                        Page 2
As Introduced


5739.025 of the Revised Code. The rate of the tax shall be five          19
and one-half per cent. The tax applies and is collectible when the       20
sale is made, regardless of the time when the price is paid or           21
delivered.                                                               22

      (2) In the case of the lease or rental, with a fixed term of       23
more than thirty days or an indefinite term with a minimum period        24
of more than thirty days, of any motor vehicles designed by the          25
manufacturer to carry a load of not more than one ton, watercraft,       26
outboard motor, or aircraft, or of any tangible personal property,       27
other than motor vehicles designed by the manufacturer to carry a        28
load of more than one ton, to be used by the lessee or renter            29
primarily for business purposes, the tax shall be collected by the       30
vendor at the time the lease or rental is consummated and shall be       31
calculated by the vendor on the basis of the total amount to be          32
paid by the lessee or renter under the lease agreement. If the           33
total amount of the consideration for the lease or rental includes       34
amounts that are not calculated at the time the lease or rental is       35
executed, the tax shall be calculated and collected by the vendor        36
at the time such amounts are billed to the lessee or renter. In          37
the case of an open-end lease or rental, the tax shall be                38
calculated by the vendor on the basis of the total amount to be          39
paid during the initial fixed term of the lease or rental, and for       40
each subsequent renewal period as it comes due. As used in this          41
division, "motor vehicle" has the same meaning as in section             42
4501.01 of the Revised Code, and "watercraft" includes an outdrive       43
unit attached to the watercraft.                                         44

      A lease with a renewal clause and a termination penalty or         45
similar provision that applies if the renewal clause is not              46
exercised is presumed to be a sham transaction. In such a case,          47
the tax shall be calculated and paid on the basis of the entire          48
length of the lease period, including any renewal periods, until         49
the termination penalty or similar provision no longer applies.          50
H. B. No. 581                                                         Page 3
As Introduced


The taxpayer shall bear the burden, by a preponderance of the             51
evidence, that the transaction or series of transactions is not a         52
sham transaction.                                                         53

      (3) Except as provided in division (A)(2) of this section, in       54
the case of a sale, the price of which consists in whole or in            55
part of the lease or rental of tangible personal property, the tax        56
shall be measured by the installments of that lease or rental.            57

      (4) In the case of a sale of a physical fitness facility            58
service or recreation and sports club service, the price of which         59
consists in whole or in part of a membership for the receipt of           60
the benefit of the service, the tax applicable to the sale shall          61
be measured by the installments thereof.                                  62

      (B) The tax does not apply to the following:                        63

      (1) Sales to the state or any of its political subdivisions,        64
or to any other state or its political subdivisions if the laws of        65
that state exempt from taxation sales made to this state and its          66
political subdivisions;                                                   67

      (2) Sales of food for human consumption off the premises            68
where sold;                                                               69

      (3) Sales of food sold to students only in a cafeteria,             70
dormitory, fraternity, or sorority maintained in a private,               71
public, or parochial school, college, or university;                      72

      (4) Sales of newspapers and of magazine subscriptions and           73
sales or transfers of magazines distributed as controlled                 74
circulation publications;                                                 75

      (5) The furnishing, preparing, or serving of meals without          76
charge by an employer to an employee provided the employer records        77
the meals as part compensation for services performed or work             78
done;                                                                     79

      (6) Sales of motor fuel upon receipt, use, distribution, or         80
H. B. No. 581                                                         Page 4
As Introduced


sale of which in this state a tax is imposed by the law of this           81
state, but this exemption shall not apply to the sale of motor            82
fuel on which a refund of the tax is allowable under division (A)         83
of section 5735.14 of the Revised Code; and the tax commissioner          84
may deduct the amount of tax levied by this section applicable to         85
the price of motor fuel when granting a refund of motor fuel tax          86
pursuant to division (A) of section 5735.14 of the Revised Code           87
and shall cause the amount deducted to be paid into the general           88
revenue fund of this state;                                               89

      (7) Sales of natural gas by a natural gas company, of water         90
by a water-works company, or of steam by a heating company, if in         91
each case the thing sold is delivered to consumers through pipes          92
or conduits, and all sales of communications services by a                93
telegraph company, all terms as defined in section 5727.01 of the         94
Revised Code, and sales of electricity delivered through wires;           95

      (8) Casual sales by a person, or auctioneer employed directly       96
by the person to conduct such sales, except as to such sales of           97
motor vehicles, watercraft or outboard motors required to be              98
titled under section 1548.06 of the Revised Code, watercraft              99
documented with the United States coast guard, snowmobiles, and          100
all-purpose vehicles as defined in section 4519.01 of the Revised        101
Code;                                                                    102

      (9)(a) Sales of services or tangible personal property, other      103
than motor vehicles, mobile homes, and manufactured homes, by            104
churches, organizations exempt from taxation under section               105
501(c)(3) of the Internal Revenue Code of 1986, or nonprofit             106
organizations operated exclusively for charitable purposes as            107
defined in division (B)(12) of this section, provided that the           108
number of days on which such tangible personal property or               109
services, other than items never subject to the tax, are sold does       110
not exceed six in any calendar year, except as otherwise provided        111
in division (B)(9)(b) of this section. If the number of days on          112
H. B. No. 581                                                        Page 5
As Introduced


which such sales are made exceeds six in any calendar year, the         113
church or organization shall be considered to be engaged in             114
business and all subsequent sales by it shall be subject to the         115
tax. In counting the number of days, all sales by groups within a       116
church or within an organization shall be considered to be sales        117
of that church or organization.                                         118

      (b) The limitation on the number of days on which tax-exempt      119
sales may be made by a church or organization under division            120
(B)(9)(a) of this section does not apply to sales made by student       121
clubs and other groups of students of a primary or secondary            122
school, or a parent-teacher association, booster group, or similar      123
organization that raises money to support or fund curricular or         124
extracurricular activities of a primary or secondary school.            125

      (c) Divisions (B)(9)(a) and (b) of this section do not apply      126
to sales by a noncommercial educational radio or television             127
broadcasting station.                                                   128

      (10) Sales not within the taxing power of this state under        129
the Constitution of the United States;                                  130

      (11) Except for transactions that are sales under division        131
(B)(3)(r) of section 5739.01 of the Revised Code, the                   132
transportation of persons or property, unless the transportation        133
is by a private investigation and security service;                     134

      (12) Sales of tangible personal property or services to           135
churches, to organizations exempt from taxation under section           136
501(c)(3) of the Internal Revenue Code of 1986, and to any other        137
nonprofit organizations operated exclusively for charitable             138
purposes in this state, no part of the net income of which inures       139
to the benefit of any private shareholder or individual, and no         140
substantial part of the activities of which consists of carrying        141
on propaganda or otherwise attempting to influence legislation;         142
sales to offices administering one or more homes for the aged or        143
H. B. No. 581                                                        Page 6
As Introduced


one or more hospital facilities exempt under section 140.08 of the      144
Revised Code; and sales to organizations described in division (D)      145
of section 5709.12 of the Revised Code.                                 146

      "Charitable purposes" means the relief of poverty; the            147
improvement of health through the alleviation of illness, disease,      148
or injury; the operation of an organization exclusively for the         149
provision of professional, laundry, printing, and purchasing            150
services to hospitals or charitable institutions; the operation of      151
a home for the aged, as defined in section 5701.13 of the Revised       152
Code; the operation of a radio or television broadcasting station       153
that is licensed by the federal communications commission as a          154
noncommercial educational radio or television station; the              155
operation of a nonprofit animal adoption service or a county            156
humane society; the promotion of education by an institution of         157
learning that maintains a faculty of qualified instructors,             158
teaches regular continuous courses of study, and confers a              159
recognized diploma upon completion of a specific curriculum; the        160
operation of a parent-teacher association, booster group, or            161
similar organization primarily engaged in the promotion and             162
support of the curricular or extracurricular activities of a            163
primary or secondary school; the operation of a community or area       164
center in which presentations in music, dramatics, the arts, and        165
related fields are made in order to foster public interest and          166
education therein; the production of performances in music,             167
dramatics, and the arts; or the promotion of education by an            168
organization engaged in carrying on research in, or the                 169
dissemination of, scientific and technological knowledge and            170
information primarily for the public.                                   171

      Nothing in this division shall be deemed to exempt sales to       172
any organization for use in the operation or carrying on of a           173
trade or business, or sales to a home for the aged for use in the       174
operation of independent living facilities as defined in division       175
H. B. No. 581                                                         Page 7
As Introduced


(A) of section 5709.12 of the Revised Code.                              176

      (13) Building and construction materials and services sold to      177
construction contractors for incorporation into a structure or           178
improvement to real property under a construction contract with          179
this state or a political subdivision of this state, or with the         180
United States government or any of its agencies; building and            181
construction materials and services sold to construction                 182
contractors for incorporation into a structure or improvement to         183
real property that are accepted for ownership by this state or any       184
of its political subdivisions, or by the United States government        185
or any of its agencies at the time of completion of the structures       186
or improvements; building and construction materials sold to             187
construction contractors for incorporation into a horticulture           188
structure or livestock structure for a person engaged in the             189
business of horticulture or producing livestock; building                190
materials and services sold to a construction contractor for             191
incorporation into a house of public worship or religious                192
education, or a building used exclusively for charitable purposes        193
under a construction contract with an organization whose purpose         194
is as described in division (B)(12) of this section; building            195
materials and services sold to a construction contractor for             196
incorporation into a building under a construction contract with         197
an organization exempt from taxation under section 501(c)(3) of          198
the Internal Revenue Code of 1986 when the building is to be used        199
exclusively for the organization's exempt purposes; building and         200
construction materials sold for incorporation into the original          201
construction of a sports facility under section 307.696 of the           202
Revised Code; building and construction materials and services           203
sold to a construction contractor for incorporation into real            204
property outside this state if such materials and services, when         205
sold to a construction contractor in the state in which the real         206
property is located for incorporation into real property in that         207
state, would be exempt from a tax on sales levied by that state;         208
H. B. No. 581                                                        Page 8
As Introduced


and, until one calendar year after the construction of a                209
convention center that qualifies for property tax exemption under       210
section 5709.084 of the Revised Code is completed, building and         211
construction materials and services sold to a construction              212
contractor for incorporation into the real property comprising          213
that convention center;                                                 214

      (14) Sales of ships or vessels or rail rolling stock used or      215
to be used principally in interstate or foreign commerce, and           216
repairs, alterations, fuel, and lubricants for such ships or            217
vessels or rail rolling stock;                                          218

      (15) Sales to persons primarily engaged in any of the             219
activities mentioned in division (B)(42)(a), (g), or (h) of this        220
section, to persons engaged in making retail sales, or to persons       221
who purchase for sale from a manufacturer tangible personal             222
property that was produced by the manufacturer in accordance with       223
specific designs provided by the purchaser, of packages, including      224
material, labels, and parts for packages, and of machinery,             225
equipment, and material for use primarily in packaging tangible         226
personal property produced for sale, including any machinery,           227
equipment, and supplies used to make labels or packages, to             228
prepare packages or products for labeling, or to label packages or      229
products, by or on the order of the person doing the packaging, or      230
sold at retail. "Packages" includes bags, baskets, cartons,             231
crates, boxes, cans, bottles, bindings, wrappings, and other            232
similar devices and containers, but does not include motor              233
vehicles or bulk tanks, trailers, or similar devices attached to        234
motor vehicles. "Packaging" means placing in a package. Division        235
(B)(15) of this section does not apply to persons engaged in            236
highway transportation for hire.                                        237

      (16) Sales of food to persons using supplemental nutrition        238
assistance program benefits to purchase the food. As used in this       239
division, "food" has the same meaning as in 7 U.S.C. 2012 and           240
H. B. No. 581                                                        Page 9
As Introduced


federal regulations adopted pursuant to the Food and Nutrition Act      241
of 2008.                                                                242

      (17) Sales to persons engaged in farming, agriculture,            243
horticulture, or floriculture, of tangible personal property for        244
use or consumption primarily in the production by farming,              245
agriculture, horticulture, or floriculture of other tangible            246
personal property for use or consumption primarily in the               247
production of tangible personal property for sale by farming,           248
agriculture, horticulture, or floriculture; or material and parts       249
for incorporation into any such tangible personal property for use      250
or consumption in production; and of tangible personal property         251
for such use or consumption in the conditioning or holding of           252
products produced by and for such use, consumption, or sale by          253
persons engaged in farming, agriculture, horticulture, or               254
floriculture, except where such property is incorporated into real      255
property;                                                               256

      (18) Sales of drugs for a human being that may be dispensed       257
only pursuant to a prescription; insulin as recognized in the           258
official United States pharmacopoeia; urine and blood testing           259
materials when used by diabetics or persons with hypoglycemia to        260
test for glucose or acetone; hypodermic syringes and needles when       261
used by diabetics for insulin injections; epoetin alfa when             262
purchased for use in the treatment of persons with medical              263
disease; hospital beds when purchased by hospitals, nursing homes,      264
or other medical facilities; and medical oxygen and medical             265
oxygen-dispensing equipment when purchased by hospitals, nursing        266
homes, or other medical facilities;                                     267

      (19) Sales of prosthetic devices, durable medical equipment       268
for home use, or mobility enhancing equipment, when made pursuant       269
to a prescription and when such devices or equipment are for use        270
by a human being.                                                       271

      (20) Sales of emergency and fire protection vehicles and          272
H. B. No. 581                                                         Page 10
As Introduced


equipment to nonprofit organizations for use solely in providing          273
fire protection and emergency services, including trauma care and         274
emergency medical services, for political subdivisions of the             275
state;                                                                    276

      (21) Sales of tangible personal property manufactured in this       277
state, if sold by the manufacturer in this state to a retailer for        278
use in the retail business of the retailer outside of this state          279
and if possession is taken from the manufacturer by the purchaser         280
within this state for the sole purpose of immediately removing the        281
same from this state in a vehicle owned by the purchaser;                 282

      (22) Sales of services provided by the state or any of its          283
political subdivisions, agencies, instrumentalities, institutions,        284
or authorities, or by governmental entities of the state or any of        285
its political subdivisions, agencies, instrumentalities,                  286
institutions, or authorities;                                             287

      (23) Sales of motor vehicles to nonresidents of this state          288
under the circumstances described in division (B) of section              289
5739.029 of the Revised Code;                                             290

      (24) Sales to persons engaged in the preparation of eggs for        291
sale of tangible personal property used or consumed directly in           292
such preparation, including such tangible personal property used          293
for cleaning, sanitizing, preserving, grading, sorting, and               294
classifying by size; packages, including material and parts for           295
packages, and machinery, equipment, and material for use in               296
packaging eggs for sale; and handling and transportation equipment        297
and parts therefor, except motor vehicles licensed to operate on          298
public highways, used in intraplant or interplant transfers or            299
shipment of eggs in the process of preparation for sale, when the         300
plant or plants within or between which such transfers or                 301
shipments occur are operated by the same person. "Packages"               302
includes containers, cases, baskets, flats, fillers, filler flats,        303
cartons, closure materials, labels, and labeling materials, and           304
H. B. No. 581                                                         Page 11
As Introduced


"packaging" means placing therein.                                        305

      (25)(a) Sales of water to a consumer for residential use;           306

      (b) Sales of water by a nonprofit corporation engaged               307
exclusively in the treatment, distribution, and sale of water to          308
consumers, if such water is delivered to consumers through pipes          309
or tubing.                                                                310

      (26) Fees charged for inspection or reinspection of motor           311
vehicles under section 3704.14 of the Revised Code;                       312

      (27) Sales to persons licensed to conduct a food service            313
operation pursuant to section 3717.43 of the Revised Code, of             314
tangible personal property primarily used directly for the                315
following:                                                                316

      (a) To prepare food for human consumption for sale;                 317

      (b) To preserve food that has been or will be prepared for          318
human consumption for sale by the food service operator, not              319
including tangible personal property used to display food for             320
selection by the consumer;                                                321

      (c) To clean tangible personal property used to prepare or          322
serve food for human consumption for sale.                                323

      (28) Sales of animals by nonprofit animal adoption services         324
or county humane societies;                                               325

      (29) Sales of services to a corporation described in division       326
(A) of section 5709.72 of the Revised Code, and sales of tangible         327
personal property that qualifies for exemption from taxation under        328
section 5709.72 of the Revised Code;                                      329

      (30) Sales and installation of agricultural land tile, as           330
defined in division (B)(5)(a) of section 5739.01 of the Revised           331
Code;                                                                     332

      (31) Sales and erection or installation of portable grain           333
bins, as defined in division (B)(5)(b) of section 5739.01 of the          334
H. B. No. 581                                                        Page 12
As Introduced


Revised Code;                                                            335

      (32) The sale, lease, repair, and maintenance of, parts for,       336
or items attached to or incorporated in, motor vehicles that are         337
primarily used for transporting tangible personal property               338
belonging to others by a person engaged in highway transportation        339
for hire, except for packages and packaging used for the                 340
transportation of tangible personal property;                            341

      (33) Sales to the state headquarters of any veterans'              342
organization in this state that is either incorporated and issued        343
a charter by the congress of the United States or is recognized by       344
the United States veterans administration, for use by the                345
headquarters;                                                            346

      (34) Sales to a telecommunications service vendor, mobile          347
telecommunications service vendor, or satellite broadcasting             348
service vendor of tangible personal property and services used           349
directly and primarily in transmitting, receiving, switching, or         350
recording any interactive, one- or two-way electromagnetic               351
communications, including voice, image, data, and information,           352
through the use of any medium, including, but not limited to,            353
poles, wires, cables, switching equipment, computers, and record         354
storage devices and media, and component parts for the tangible          355
personal property. The exemption provided in this division shall         356
be in lieu of all other exemptions under division (B)(42)(a) or          357
(n) of this section to which the vendor may otherwise be entitled,       358
based upon the use of the thing purchased in providing the               359
telecommunications, mobile telecommunications, or satellite              360
broadcasting service.                                                    361

      (35)(a) Sales where the purpose of the consumer is to use or       362
consume the things transferred in making retail sales and                363
consisting of newspaper inserts, catalogues, coupons, flyers, gift       364
certificates, or other advertising material that prices and              365
describes tangible personal property offered for retail sale.            366
H. B. No. 581                                                         Page 13
As Introduced


      (b) Sales to direct marketing vendors of preliminary                367
materials such as photographs, artwork, and typesetting that will         368
be used in printing advertising material; and of printed matter           369
that offers free merchandise or chances to win sweepstake prizes          370
and that is mailed to potential customers with advertising                371
material described in division (B)(35)(a) of this section;                372

      (c) Sales of equipment such as telephones, computers,               373
facsimile machines, and similar tangible personal property                374
primarily used to accept orders for direct marketing retail sales.        375

      (d) Sales of automatic food vending machines that preserve          376
food with a shelf life of forty-five days or less by refrigeration        377
and dispense it to the consumer.                                          378

      For purposes of division (B)(35) of this section, "direct           379
marketing" means the method of selling where consumers order              380
tangible personal property by United States mail, delivery                381
service, or telecommunication and the vendor delivers or ships the        382
tangible personal property sold to the consumer from a warehouse,         383
catalogue distribution center, or similar fulfillment facility by         384
means of the United States mail, delivery service, or common              385
carrier.                                                                  386

      (36) Sales to a person engaged in the business of                   387
horticulture or producing livestock of materials to be                    388
incorporated into a horticulture structure or livestock structure;        389

      (37) Sales of personal computers, computer monitors, computer       390
keyboards, modems, and other peripheral computer equipment to an          391
individual who is licensed or certified to teach in an elementary         392
or a secondary school in this state for use by that individual in         393
preparation for teaching elementary or secondary school students;         394

      (38) Sales to a professional racing team of any of the              395
following:                                                                396

      (a) Motor racing vehicles;                                          397
H. B. No. 581                                                         Page 14
As Introduced


      (b) Repair services for motor racing vehicles;                      398

      (c) Items of property that are attached to or incorporated in       399
motor racing vehicles, including engines, chassis, and all other          400
components of the vehicles, and all spare, replacement, and               401
rebuilt parts or components of the vehicles; except not including         402
tires, consumable fluids, paint, and accessories consisting of            403
instrumentation sensors and related items added to the vehicle to         404
collect and transmit data by means of telemetry and other forms of        405
communication.                                                            406

      (39) Sales of used manufactured homes and used mobile homes,        407
as defined in section 5739.0210 of the Revised Code, made on or           408
after January 1, 2000;                                                    409

      (40) Sales of tangible personal property and services to a          410
provider of electricity used or consumed directly and primarily in        411
generating, transmitting, or distributing electricity for use by          412
others, including property that is or is to be incorporated into          413
and will become a part of the consumer's production, transmission,        414
or distribution system and that retains its classification as             415
tangible personal property after incorporation; fuel or power used        416
in the production, transmission, or distribution of electricity;          417
energy conversion equipment as defined in section 5727.01 of the          418
Revised Code; and tangible personal property and services used in         419
the repair and maintenance of the production, transmission, or            420
distribution system, including only those motor vehicles as are           421
specially designed and equipped for such use. The exemption               422
provided in this division shall be in lieu of all other exemptions        423
in division (B)(42)(a) or (n) of this section to which a provider         424
of electricity may otherwise be entitled based on the use of the          425
tangible personal property or service purchased in generating,            426
transmitting, or distributing electricity.                                427

      (41) Sales to a person providing services under division            428
(B)(3)(r) of section 5739.01 of the Revised Code of tangible              429
H. B. No. 581                                                         Page 15
As Introduced


personal property and services used directly and primarily in             430
providing taxable services under that section.                            431

      (42) Sales where the purpose of the purchaser is to do any of       432
the following:                                                            433

      (a) To incorporate the thing transferred as a material or a         434
part into tangible personal property to be produced for sale by           435
manufacturing, assembling, processing, or refining; or to use or          436
consume the thing transferred directly in producing tangible              437
personal property for sale by mining, including, without                  438
limitation, the extraction from the earth of all substances that          439
are classed geologically as minerals, production of crude oil and         440
natural gas, or directly in the rendition of a public utility             441
service, except that the sales tax levied by this section shall be        442
collected upon all meals, drinks, and food for human consumption          443
sold when transporting persons. Persons engaged in rendering              444
services in the exploration for, and production of, crude oil and         445
natural gas for others are deemed engaged directly in the                 446
exploration for, and production of, crude oil and natural gas.            447
This paragraph does not exempt from "retail sale" or "sales at            448
retail" the sale of tangible personal property that is to be              449
incorporated into a structure or improvement to real property.            450

      (b) To hold the thing transferred as security for the               451
performance of an obligation of the vendor;                               452

      (c) To resell, hold, use, or consume the thing transferred as       453
evidence of a contract of insurance;                                      454

      (d) To use or consume the thing directly in commercial              455
fishing;                                                                  456

      (e) To incorporate the thing transferred as a material or a         457
part into, or to use or consume the thing transferred directly in         458
the production of, magazines distributed as controlled circulation        459
publications;                                                             460
H. B. No. 581                                                         Page 16
As Introduced


      (f) To use or consume the thing transferred in the production       461
and preparation in suitable condition for market and sale of              462
printed, imprinted, overprinted, lithographic, multilithic,               463
blueprinted, photostatic, or other productions or reproductions of        464
written or graphic matter;                                                465

      (g) To use the thing transferred, as described in section           466
5739.011 of the Revised Code, primarily in a manufacturing                467
operation to produce tangible personal property for sale;                 468

      (h) To use the benefit of a warranty, maintenance or service        469
contract, or similar agreement, as described in division (B)(7) of        470
section 5739.01 of the Revised Code, to repair or maintain                471
tangible personal property, if all of the property that is the            472
subject of the warranty, contract, or agreement would not be              473
subject to the tax imposed by this section;                               474

      (i) To use the thing transferred as qualified research and          475
development equipment;                                                    476

      (j) To use or consume the thing transferred primarily in            477
storing, transporting, mailing, or otherwise handling purchased           478
sales inventory in a warehouse, distribution center, or similar           479
facility when the inventory is primarily distributed outside this         480
state to retail stores of the person who owns or controls the             481
warehouse, distribution center, or similar facility, to retail            482
stores of an affiliated group of which that person is a member, or        483
by means of direct marketing. This division does not apply to             484
motor vehicles registered for operation on the public highways. As        485
used in this division, "affiliated group" has the same meaning as         486
in division (B)(3)(e) of section 5739.01 of the Revised Code and          487
"direct marketing" has the same meaning as in division (B)(35) of         488
this section.                                                             489

      (k) To use or consume the thing transferred to fulfill a            490
contractual obligation incurred by a warrantor pursuant to a              491
H. B. No. 581                                                         Page 17
As Introduced


warranty provided as a part of the price of the tangible personal         492
property sold or by a vendor of a warranty, maintenance or service        493
contract, or similar agreement the provision of which is defined          494
as a sale under division (B)(7) of section 5739.01 of the Revised         495
Code;                                                                     496

      (l) To use or consume the thing transferred in the production       497
of a newspaper for distribution to the public;                            498

      (m) To use tangible personal property to perform a service          499
listed in division (B)(3) of section 5739.01 of the Revised Code,         500
if the property is or is to be permanently transferred to the             501
consumer of the service as an integral part of the performance of         502
the service;                                                              503

      (n) To use or consume the thing transferred primarily in            504
producing tangible personal property for sale by farming,                 505
agriculture, horticulture, or floriculture. Persons engaged in            506
rendering farming, agriculture, horticulture, or floriculture             507
services for others are deemed engaged primarily in farming,              508
agriculture, horticulture, or floriculture. This paragraph does           509
not exempt from "retail sale" or "sales at retail" the sale of            510
tangible personal property that is to be incorporated into a              511
structure or improvement to real property.                                512

      (o) To use or consume the thing transferred in acquiring,           513
formatting, editing, storing, and disseminating data or                   514
information by electronic publishing.                                     515

      As used in division (B)(42) of this section, "thing" includes       516
all transactions included in divisions (B)(3)(a), (b), and (e) of         517
section 5739.01 of the Revised Code.                                      518

      (43) Sales conducted through a coin operated device that            519
activates vacuum equipment or equipment that dispenses water,             520
whether or not in combination with soap or other cleaning agents          521
or wax, to the consumer for the consumer's use on the premises in         522
H. B. No. 581                                                         Page 18
As Introduced


washing, cleaning, or waxing a motor vehicle, provided no other           523
personal property or personal service is provided as part of the          524
transaction.                                                              525

      (44) Sales of replacement and modification parts for engines,       526
airframes, instruments, and interiors in, and paint for, aircraft         527
used primarily in a fractional aircraft ownership program, and            528
sales of services for the repair, modification, and maintenance of        529
such aircraft, and machinery, equipment, and supplies primarily           530
used to provide those services.                                           531

      (45) Sales of telecommunications service that is used               532
directly and primarily to perform the functions of a call center.         533
As used in this division, "call center" means any physical                534
location where telephone calls are placed or received in high             535
volume for the purpose of making sales, marketing, customer               536
service, technical support, or other specialized business                 537
activity, and that employs at least fifty individuals that engage         538
in call center activities on a full-time basis, or sufficient             539
individuals to fill fifty full-time equivalent positions.                 540

      (46) Sales by a telecommunications service vendor of 900            541
service to a subscriber. This division does not apply to                  542
information services, as defined in division (FF) of section              543
5739.01 of the Revised Code.                                              544

      (47) Sales of value-added non-voice data service. This              545
division does not apply to any similar service that is not                546
otherwise a telecommunications service.                                   547

      (48)(a) Sales of machinery, equipment, and software to a            548
qualified direct selling entity for use in a warehouse or                 549
distribution center primarily for storing, transporting, or               550
otherwise handling inventory that is held for sale to independent         551
salespersons who operate as direct sellers and that is held               552
primarily for distribution outside this state;                            553
H. B. No. 581                                                         Page 19
As Introduced


      (b) As used in division (B)(48)(a) of this section:                 554

      (i) "Direct seller" means a person selling consumer products        555
to individuals for personal or household use and not from a fixed         556
retail location, including selling such product at in-home product        557
demonstrations, parties, and other one-on-one selling.                    558

      (ii) "Qualified direct selling entity" means an entity              559
selling to direct sellers at the time the entity enters into a tax        560
credit agreement with the tax credit authority pursuant to section        561
122.17 of the Revised Code, provided that the agreement was               562
entered into on or after January 1, 2007. Neither contingencies           563
relevant to the granting of, nor later developments with respect          564
to, the tax credit shall impair the status of the qualified direct        565
selling entity under division (B)(48) of this section after               566
execution of the tax credit agreement by the tax credit authority.        567

      (c) Division (B)(48) of this section is limited to machinery,       568
equipment, and software first stored, used, or consumed in this           569
state within the period commencing June 24, 2008, and ending on           570
the date that is five years after that date.                              571

      (49) Sales of materials, parts, equipment, or engines used in       572
the repair or maintenance of aircraft or avionics systems of such         573
aircraft, and sales of repair, remodeling, replacement, or                574
maintenance services in this state performed on aircraft or on an         575
aircraft's avionics, engine, or component materials or parts. As          576
used in division (B)(49) of this section, "aircraft" means                577
aircraft of more than six thousand pounds maximum certified               578
takeoff weight or used exclusively in general aviation.                   579

      (50) Sales of full flight simulators that are used for pilot        580
or flight-crew training, sales of repair or replacement parts or          581
components, and sales of repair or maintenance services for such          582
full flight simulators. "Full flight simulator" means a replica of        583
a specific type, or make, model, and series of aircraft cockpit.          584
H. B. No. 581                                                         Page 20
As Introduced


It includes the assemblage of equipment and computer programs             585
necessary to represent aircraft operations in ground and flight           586
conditions, a visual system providing an out-of-the-cockpit view,         587
and a system that provides cues at least equivalent to those of a         588
three-degree-of-freedom motion system, and has the full range of          589
capabilities of the systems installed in the device as described          590
in appendices A and B of part 60 of chapter 1 of title 14 of the          591
Code of Federal Regulations.                                              592

      (51) Any transfer or lease of tangible personal property            593
between the state and a successful proposer in accordance with            594
sections 126.60 to 126.605 of the Revised Code, provided the              595
property is part of a project as defined in section 126.60 of the         596
Revised Code and the state retains ownership of the project or            597
part thereof that is being transferred or leased, between the             598
state and JobsOhio in accordance with section 4313.02 of the              599
Revised Code.                                                             600

      (52)(a) Sales of the following occurring on the second              601
Saturday of August and the following Sunday of each year:                 602

      (i) An item of clothing, the price of which is less than one        603
hundred dollars;                                                          604

      (ii) An item of school supplies, the price of which is less         605
than one hundred dollars;                                                 606

      (iii) A computer, the price of which, less any manufacturer's       607
rebate, is less than seven hundred fifty dollars; and                     608

      (iv) A computer accessory, the price of which, less any             609
manufacturer's rebate, is less than one hundred dollars.                  610

      (b) For purposes of division (B)(52) of this section:               611

      (i) "Clothing" does not include clothing or footwear that is        612
designed primarily for athletic activity or protective use and            613
that is not normally worn except when used for the athletic               614
H. B. No. 581                                                        Page 21
As Introduced


activity or protective use for which it is designed; accessories,        615
including jewelry, handbags, luggage, umbrellas, wallets, watches,       616
and similar items carried on or about the human body, without            617
regard to whether the item is worn on the body in a manner               618
characteristic of clothing; or clothing that is rented, or that is       619
for use in a trade or business.                                          620

      (ii) "School supplies" means pens, pencils, binders,               621
notebooks, reference books, book bags, lunch boxes, calculators,         622
and similar items. "School supplies" does not include furniture,         623
items that are rented, or tangible personal property for use in a        624
trade or business.                                                       625

      (C) For the purpose of the proper administration of this           626
chapter, and to prevent the evasion of the tax, it is presumed           627
that all sales made in this state are subject to the tax until the       628
contrary is established.                                                 629

      (D) The levy of this tax on retail sales of recreation and         630
sports club service shall not prevent a municipal corporation from       631
levying any tax on recreation and sports club dues or on any             632
income generated by recreation and sports club dues.                     633

      (E) The tax collected by the vendor from the consumer under        634
this chapter is not part of the price, but is a tax collection for       635
the benefit of the state, and of counties levying an additional          636
sales tax pursuant to section 5739.021 or 5739.026 of the Revised        637
Code and of transit authorities levying an additional sales tax          638
pursuant to section 5739.023 of the Revised Code. Except for the         639
discount authorized under section 5739.12 of the Revised Code and        640
the effects of any rounding pursuant to section 5703.055 of the          641
Revised Code, no person other than the state or such a county or         642
transit authority shall derive any benefit from the collection or        643
payment of the tax levied by this section or section 5739.021,           644
5739.023, or 5739.026 of the Revised Code.                               645
H. B. No. 581                                                         Page 22
As Introduced



      Sec. 5739.05. (A)(1) The tax commissioner shall enforce and         646
administer sections 5739.01 to 5739.31 of the Revised Code, which         647
are hereby declared to be sections which the commissioner is              648
required to administer within the meaning of sections 5703.17 to          649
5703.37, 5703.39, 5703.41, and 5703.45 of the Revised Code. The           650
commissioner may adopt and promulgate, in accordance with sections        651
119.01 to 119.13 of the Revised Code, such rules as the                   652
commissioner deems necessary to administer sections 5739.01 to            653
5739.31 of the Revised Code.                                              654

      (2) In accordance with section 5703.14 of the Revised Code,         655
the tax commissioner shall adopt rules that are necessary to              656
implement the tax exemption provided by division (B)(52) of               657
section 5739.02 of the Revised Code. Before each exemption period         658
required under that division, the commissioner shall make                 659
available to vendors information bulletins explaining the                 660
exemption.                                                                661

      (B) Upon application, the commissioner may authorize a vendor       662
to pay on a predetermined basis the tax levied by or pursuant to          663
section 5739.02, 5739.021, 5739.023, or 5739.026 of the Revised           664
Code upon sales of things produced or distributed or services             665
provided by such vendor, and the commissioner may waive the               666
collection of the tax from the consumer. The commissioner shall           667
not grant such authority unless the commissioner finds that the           668
granting of the authority would improve compliance and increase           669
the efficiency of the administration of the tax. The person to            670
whom such authority is granted shall post a notice, if required by        671
the commissioner, at the location where the product is offered for        672
sale that the tax is included in the selling price. The                   673
comissioner commissioner may adopt rules to administer this               674
division.                                                                 675

      (C) The commissioner may authorize a vendor to pay, on the          676
H. B. No. 581                                                        Page 23
As Introduced


basis of a prearranged agreement under this division, the tax            677
levied by section 5739.02 or pursuant to section 5739.021,               678
5739.023, or 5739.026 of the Revised Code, and waive the                 679
requirement that the vendor maintain the complete and accurate           680
record of individual taxable sales and tax collected thereon             681
required by section 5739.11 of the Revised Code, upon application        682
of the vendor, if the commissioner finds that the conditions of          683
the vendor-applicant's business are such that the maintenance of         684
such records of individual taxable sales and tax collected thereon       685
would impose an unreasonable burden upon the vendor. If the              686
commissioner determines that such unreasonable burden has been           687
imposed, the vendor and the commissioner shall agree to the terms        688
and conditions of a test check to be conducted. If the parties are       689
unable to agree to the terms and conditions of the test check, the       690
application shall be denied. The test check conducted shall              691
determine the proportion that taxable retail sales bear to all of        692
the vendor's retail sales and the ratio which the tax required to        693
be collected under sections 5739.02, 5739.021, and 5739.023 of the       694
Revised Code bears to the receipts from the vendor's taxable             695
retail sales.                                                            696

      The vendor shall collect the tax on the vendor's taxable           697
sales and the vendor's liability for collecting or remitting shall       698
be based upon the proportions and ratios established by the test         699
check, and not upon any other basis of determination, until such         700
time as a subsequent test check is made at the request of either         701
the vendor or the commissioner where either party believes that          702
the nature of the vendor's business has so changed as to make the        703
prior or existing test check no longer representative. The               704
commissioner may give notice to the vendor at any time that the          705
authorization is revoked or the vendor may notify the commissioner       706
that the vendor no longer elects to report under the                     707
authorization. Such notice shall be delivered to the other party         708
personally or by registered mail. The revocation or cancellation         709
H. B. No. 581                                                        Page 24
As Introduced


is not effective prior to the date of receipt of such notice.            710


      Section 2. That existing sections 5739.02 and 5739.05 of the       711
Revised Code are hereby repealed.                                        712

      Section 3. Section 5739.02 of the Revised Code is presented        713
in this act as a composite of the section as amended by both Am.         714
Sub. H.B. 487 and Am. Sub. H.B. 508 of the 129th General Assembly.       715
The General Assembly, applying the principle stated in division          716
(B) of section 1.52 of the Revised Code that amendments are to be        717
harmonized if reasonably capable of simultaneous operation, finds        718
that the composite is the resulting version of the section in            719
effect prior to the effective date of the section as presented in        720
this act.                                                                721

				
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